Nothing that's inside of "WEB-INF" will be served to the client. You need to move all classes and jar files used by the applet into a publicly accessible directory. The best choice is probably the same directory the JSP file is in.
I have placed class files where the jsp files are, but still i'm getting the same error
load: class NewApplet.class not found.
java.lang.ClassNotFoundException: NewApplet.class
at sun.applet.AppletClassLoader.findClass(Unknown Source)
at java.lang.ClassLoader.loadClass(Unknown Source)
at sun.applet.AppletClassLoader.loadClass(Unknown Source)
at java.lang.ClassLoader.loadClass(Unknown Source)
at sun.applet.AppletClassLoader.loadCode(Unknown Source)
at sun.applet.AppletPanel.createApplet(Unknown Source)
at sun.plugin.AppletViewer.createApplet(Unknown Source)
at sun.applet.AppletPanel.runLoader(Unknown Source)
at sun.applet.AppletPanel.run(Unknown Source)
at java.lang.Thread.run(Unknown Source)
Caused by: java.io.IOException: open HTTP connection failed.
at sun.applet.AppletClassLoader.getBytes(Unknown Source)
at sun.applet.AppletClassLoader.access$100(Unknown Source)
at sun.applet.AppletClassLoader$1.run(Unknown Source)
at java.security.AccessController.doPrivileged(Native Method)
... 10 more